3 Out of 4 Small Businesses Expect Mobile Tech to Become More Important to Success A survey of small business owners by Bank of the West shows that SMBs are aggressively trying out new mobile technologies, including devices, apps and cloud services, and expect to use more and more of these services to power their companies. It’s pretty exciting to see how the mobile technology...

I’m quoted in a PC World piece about how apps will change the nature of desktop software. I had a long conversation with the author, Jared Newman, about how OfficeDrop’s apps, both our smartphone scanner apps and our mac desktop scanner app, ScanDrop, are dramatically changing how we distribute our SaaS product. The article’s thesis is spot on: Not surprisingly, many...

3 Out of 4 Small Businesses Expect Mobile Tech to Become More Important to Success

A survey of small business owners by Bank of the West shows that SMBs are aggressively trying out new mobile technologies, including devices, apps and cloud services, and expect to use more and more of these services to power their companies. It’s pretty exciting to see how the mobile technology revolution is being lead by small businesses, not enterprises. According to the survey, small business owners really think that THEY are going to be the ones to most benefit from mobile technologies – even more so than big enterprises.

Most small companies that invested in mobile technologies saw a positive return on their investment – it sounds like the time and effort was worth it for most of those surveyed. Also positive is that only 35% of the businesses had made NO investment in mobile technology – although, I’m willing to bet that at this point most are not thinking about or including their cell phones, which pretty much everyone has at this point – and which also does make people more productive.

SMB’s Get Positive Return on Mobile Investments

Mobile Increases SMB Efficiency

2/3 small businesses have seem increased efficiency from mobile technologies and 60% believe that mobile technologies are completing functions that other technologies can not accomplish. This is pretty exciting, as it proves that mobile will create new, exciting markets that have never before been contemplated! Wahoo mobile developers!

Mobile Creates Efficiency

My company, OfficeDrop, is seeing continued adoption of our small business cloud storage apps. These are lead by our mobile apps, like the iPhone PDF scanner application and our Android scanner app – both of which are having banner months! Check them out today if you are looking for a good way to manage your small business files in the cloud from anywhere, at anytime, using mobile and desktop devices.

Not surprisingly, many developers are enthusiastic about the easy distribution and streamlined billing that app stores provide, yet these stores also introduce challenges–some that are unique to desktops, and others that have plagued smartphones since the dawn of the iPhone App Store.

I spoke with Jared for a while about how we were wrong about how customers wanted to use our service. They actually want to download and install apps, not use the web. We were off by 100%.

Healy Jones, vice president of marketing for OfficeDrop, noticed this shift away from the Web immediately after his company released mobile and desktop apps for its document-scanning service.

OfficeDrop, which provides searchable cloud storage, says that it sees seven times more user engagement through its apps than it does through the Web browser, Jones notes. Since releasing its first apps in 2011, OfficeDrop’s user base has grown from 7000 users to 140,000 users.

“We had a thesis that people did not want to install software; that the cloud meant that people could use a browser to interact with software and would never have to install anything. We were completely wrong,” Jones says. “People love installing software.”

Gartner is predicting that Software as a Service will hit $14.5 billion in 2012. 17.9% growth off the previous year – not bad at all.

SaaS grow should stay robust until 2015 when Gartner says it will be $22.1 billion.

I happen to think it will stay strong beyond 2015, but I’m pretty sure that this just a limit of how far out Gartner wants to make a prediction at this time, not an actual limit of how long SaaS will continue to grow.

A quote from the release: “After more than a decade of use, adoption of SaaS continues to grow and evolve regionally within the enterprise application markets,” said Sharon Mertz, research director at Gartner. “Increasing familiarity with the SaaS model, continued oversight on IT budgets, the growth of platform as a service (PaaS) developer communities and interest in cloud computing are now driving adoption forward.”

Another cool thing about the Gartner press release is that it’s dated May 27, 2012 – they are really forward thinking over there!

North America Leads SaaS Adoption

According to the release, ”North America, specifically the U.S., currently represents the largest opportunity for SaaS, and it is the most mature of the regional markets. SaaS software revenue is forecast to total $9.1 billion in 2012, up from $7.8 billion in 2011. Consistent with other regions, North America shows the highest SaaS deployments in expense management, financials, email and office suites. Use of Web conferencing is higher in North America than in other regions, in part because of a highly distributed workforce.”

I’ve used this decoy pricing tactic on OfficeDrop’s pricing pages for a while. In particular, our digital filing pricing page has an expensive plan that has nicely increased overall conversion on the page.

The main result of this decoy is increased conversion on the page. In otherwords, a higher number & percent of visitors to the page pick a plan and become an OfficeDrop user. It hasn’t really changed the MIX of plans (very few people pick the expensive plan and the same % of people pick the other plans). But I consider the decoy plan a success because it’s getting more people into our funnel.

Conversion Rate w/Decoy Pricing

You can see the pop here when we added a decoy pricing plan to our standard digital filing pricing page. This chart is the % of visitors who visited the page and then signed up for a plan. I.e. the conversion rate of the page. Note that there is a little dip in the beginning that has nothing to do with pricing; it’s a data error. The way to look at this w/o the data error is the two little peaks on the left are close to the pre-decoy conversion rate average; the hump on the rigth is the new average post addition of the decoy pricing plan.

What the Decoy Pricing Plan Looks Like

The decoy pricing is the “ScanPro” “ScanFive” plan on the right. (Thanks for the typo catch Pete!)

Decoy Pricing Plan

It’s designed to be expensive and to make clear that we’ve got the ability to support additional users in the plans… it’s not really clicked that often.

Anyways, check out the post I linked to above. You’ll find it very solid, and it explains why a decoy plan works.

Lincoln Murphy, the well known SaaS Marketing guy, got pretty upset at a recent TechCrunch piece on the freemium pricing strategy that posted this weekend. Lincoln says (I’m on his email newsletter list; it’s pretty good): “In a nutshell the Complete Guide to Freemium on TechCrunch is a post by someone who got lucky enough to get their post accepted so he can get a backlink to his site from TechCrunch and where he takes the results of studies and some words from high-profile VCs and weaves it together into a post for the TMZ of the tech industry.”

What is Freemium?

However, I don’t think it’s the Ultimate Guide to what is a actually a pretty complicated pricing strategy. I happen to disagree with the author’s ideas that a time based free trial = freemium. I can’t tell if my disagreement is a big deal or not – his company, FutureSimple, has a free trial offer, so it’s hard to know how much of the piece is using that as the basis for the post vs. a couple of professors he references. I disagree with the idea that a free trial is freemium so much because OfficeDrop recently made the switch from a free trial to having a free forever plan and we called it “going freemium.”

My definition of freemium is that a user will have the opportunity to use the service/software/whatever forever without having to pay for it. It may be a limited plan or limited features, it may be ad supported; whatever. It just means you can use it for as long as you’d like without paying. FreshBooks has a freemium model, but you run out of “free” pretty quickly. You can jump through hoops to keep it free, but most likely you’ll upgrade. A free trial that expires after a set number of days doesn’t meet my definition of freemium.

OfficeDrop’s free plan is driven by our mobile distribution strategy. I write a little bit about why we think apps are taking over here. But you should listen to my conversation with Lincoln – I call it “Healy Jones on Freemium.” Our free plan is a free forever plan, with some upgrade triggers baked in – search limits, storage limits, OCR limits. But it’s a pretty good product for free; we are the only company offering free high quality OCR for scanned images coupled with storage. People seem to like the plan… and they also seem to like to upgrade to paid plans. We like that part for sure!

Yup, it’s me, Healy Jones, talking about the OfficeDrop cloud filing system switch to freemium with Lincoln Murphy of 16Ventures. Lincoln is that well known SaaS pricing guy, and we go over the switch OfficeDrop made from a pure web only service with a 60 day free trial to an app focused business with a freemium pricing model.

The switch in our pricing strategy has been pretty huge for OfficeDrop. It’s driving a lot of new user growth – both free and paid. It’s been only a month and a half since the switch and the change is clearly measurable with our analytics packages. So far, for our SaaS company, freemium seems to be working.